Fuel used only for heat in manufacture is not raw material for exemption under the notification.

Hydrogen used with oxygen merely to supply heat for melting quartz burner ends was held not to be a raw material under Notification No. 201/79. The Court applied the principle that a substance serving only as fuel in manufacture, and not as a material component of the end product, does not qualify for exemption treatment as raw material. On that basis, hydrogen in this use was excluded from the notification, and the issue was answered against the assessee and in favour of the Revenue.

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Issues: Whether hydrogen used along with oxygen as fuel to melt the ends of quartz burners qualifies as a raw material for the purpose of Notification No. 201/79.

Analysis: The Tribunal's finding was that hydrogen was used only as fuel in the manufacturing process and served as a source of heat energy. On that basis, it did not perform the function of a raw material or component part of the product. The Court applied the principle that a fuel which merely supplies heat for processing does not become a raw material within the meaning of the exemption notification. The view was consistent with the governing Supreme Court authority relied upon in the judgment.

Conclusion: Hydrogen used in this manner does not qualify as a raw material under Notification No. 201/79, and the question is answered against the assessee and in favour of the Revenue.

Ratio Decidendi: A substance used only as fuel to generate heat in manufacture is not a raw material for exemption under a notification unless it participates as a material component in the end product.

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